SoftBank Backs Indonesia's New Capital City

Southeast Asia's most talked-about investment story just got weirder.

Some may remember venture capital giant SoftBank as one of the various partners quick to put resources into developing Indonesia's new capital city in East Kalimantan. All things considered, Japanese investors (and its partners, including the world's biggest asset manager BlackRock and former British Prime Minister Tony Blair) are pushing for the yet-to-be-developed city to bid for the 2032 Olympics, as indicated by a Reuters report.

Indonesia would have the honor to be the first Southeast Asian nation to host the Olympics if this bid is successful.

Supposedly, SoftBank and its group have promised to make good as much as $40 billion to build the new city. The Japanese conglomerate considers this to be a decent chance to include its local portfolio businesses, including ride-hailing firm Grab and online selling business giant Tokopedia—and make them part of the "smart city."

Grab is set to be the transportation partner for the Games, according to a Reuters report. However, you also have to think about their local competitor, Indonesia's Gojek taxi service. This step would mean being defeated by their rival in their very own country despite their efforts to expand to the whole of Southeast Asia. This shows clearly who would benefit from SoftBank's move, and it sure is not Gojek.

However, investors of both ride-hailing companies are disappointed with their investment. Only the Japanese conglomerate seems to be happy about it while other investors want to pull out. A Financial Times report said investors are campaigning SoftBank to consolidate the Indonesian activities of Grab and Gojek as they strive to end to the unhealthy competition the two companies are in.

Grab's support in the improvement of Indonesia's new capital might help change the minds of the investors.